FINAL DECISION |
CASE: MEX-USA-00-1904-01 |
I. INTRODUCTION
This Panel was established in
accordance with Article 1904 of the North American Free Trade Agreement (“NAFTA”),
to review the final determination issued by the former Ministry of Commerce and
Industrial Development (Secretaría de Comercio and Fomento Industrial),
currently known as the Ministry of Commerce (Secretaría de Economía)
(indistinctively, the “Ministry of Commerce”), on the imports of urea,
product classified under tariff item 3102.10.01 of the Tariff of the Importation
General Tax Law, original from the United States of America and the Russian
Federation, regardless of the exporting country, as published in the Federal
Official Gazette (Diario Oficial of the Federación) (the “DOF”) of
the United Mexican States (“Mexico”) on April 17, 2000 (the “Final
Determination”).
II. BACKGROUND
A. OF THE ADMINISTRATIVE INVESTIGATION
1. On September 30, 1998, Agro
Nitrogenados, S.A. de C.V., currently known as Agromex Fertilizantes, S.A. de
C.V. (“AGROMEX”), requested the Ministry of Commerce the initiation of an
administrative investigation on international commercial unfair practices, in
the matter of dumping, and the application of countervailing duties, in
connection with imports of urea original from the United States of America, the
Russian Federation and the Republic of Latonia, regardless the exporting
country. AGROMEX argued that during the period from May 1 st,/font,
1997 thru April 30th, 1998, the imports at issue were made under dumping
conditions, which allegedly caused damage to the national production of
identical or similar goods.
2. On December 14, 1998, the
Ministry of Commerce published in the DOF the relevant determination declaring
the initiation of the administrative investigation in connection with the
imports of urea original from the United States of America and the Russian
Federation, for a period of review from May 1st, 1997 thru April 30th, 1998. The
Ministry of Commerce dismissed the request for an administrative investigation
regarding the imports original from the Republic of Latonia.
3. On December 10, 1999, the
Ministry of Commerce published in the DOF the Preliminary Determination of the
administrative investigation at issue, in which the Ministry of Commerce
resolved to continue the mentioned investigation without the assessment of
provisional countervailing duties whatsoever.
4. On April 17, 2000, the
Ministry of Commerce published in the DOF the Final Determination of the
administrative investigation at issue, in which the Ministry of Commerce
resolved to conclude the mentioned investigation without the assessment of
definitive countervailing duties whatsoever, based upon the reasons that are
subject to analysis in this review (the “Final Determination”).
B. OF THE REVIEW PROCEEDINGS BEFORE THIS
BINATIONAL PANEL
1. On May 4, 2000, AGROMEX filed
a Request for Panel Review in accordance with Article 1904 of the NAFTA
regarding the Final Determination.
2. On June 5, 2000, AGROMEX
submitted a Complaint challenging the Final Determination (the “Complaint”).
3. On June 16, 18 an 19, 2000,
the Ministry of Commerce, Union Oil Company of California Corporation (“UNOCAL”),
Promotora Nacional Agropecuaria Mexicana, S.A. de C.V. (“PRONAMEX”)
and JSC Togliattiazot (“JSC”) submitted, respectively, their
corresponding Notices of Appearance in opposition to the Complaint filed by
AGROMEX. By means of several pleadings thereafter, the above mentioned
participants, including AGROMEX, appointed their respective counsels for record,
and requested their authorization and/or revocation for protective orders on
confidential information in this review.
4. On September 6, 2000, AGROMEX
submitted a Brief in support to its own Complaint (the “Brief in Support to
the Complaint”).
5. On October 13, 2000, the
Ministry of Commerce submitted the relevant copies of the Final Determination,
the index for the administrative record, and both confidential and public
versions of the administrative record.
6. On November 1 and 3, 2000, the
Ministry of Commerce, PRONAMEX, JSC and UNOCAL submitted, respectively, their
corresponding Briefs in opposition to the Complaint filed by AGROMEX
(respectively, the “Brief in Opposition to the Complaint” of each
participant).
7. On November 21, 2000, AGROMEX
filed a response to the Briefs submitted by the Ministry of Commerce, PRONAMEX,
JSC and UNOCAL (respectively, the “Brief in Response” to each
participant).
8. On December 4, 2000, AGROMEX
and the Ministry of Commerce filed the appendix to their respective Briefs.
9. On November 6, 2001, this
Binational Panel issued an Order setting the date for the Public Hearing to be
held on December 4, 2001. By means of several pleadings thereafter, the participants
appointed their respective representatives to intervene during the Public
Hearing.
10. On November 15, 2001, JSC
filed a motion to exclude from the Panel review the imports from the Russian
Federation.
11. On November 22, 2001, the
Ministry of Commerce filed a motion in order for the topics on the standard of
review and the scope of the review by the Binational Panel to be discussed
during the Public Hearing.
12. On December 3, 2001, this
Binational Panel issued an Order by which it granted the motion filed by JSC to
exclude from the Panel review the imports of urea from the Russian Federation,
based on the reasons referred to in section III. A. hereof.
13. On December 4, 2001, the
Public Hearing for this review was held in Mexico City. At the Public Hearing,
this Binational Panel denied the motion to hear allegations on the standard of
review and the scope of the review by the Binational Panel, upon considering
that such issues were not controversial. On the same date, the Ministry of
Commerce filed a pleading including a written version of its oral interventions
at the Public Hearing.
14. On January 28, 2002, this
Binational Panel issued an Order requesting the Ministry of Commerce to submit
certain information referred to in items 54, 73 and 74 of the Final
Determination, in connection with information allegedly provided by Petroquímica
Cosoleacaque, dated December 10, 1999 and January 28, 2000.
15. On January 31, 2002, the
Ministry of Commerce submitted information in response to the Order mentioned in
the paragraph immediately above.
III. DECISION
A. ON THE IMPORTS FROM THE RUSSIAN FEDERATION
1. This Binational Panel
resolved, in first place, on December 3, 2001, certain motion in connection with
the merits of this Panel Review on the imports of urea from the Russian
Federation, which was granted based on the reasons stated herein below.
2. Specifically, the Ministry of
Commerce and the rest of participants in opposition to the Complaint of AGROMEX,
argued that there is no basis for this Panel to review the imports from a
country that is not a party to the NAFTA, by which this review is governed.
Specifically, the Ministry of Commerce stated in its Brief in opposition to the
Complaint of AGROMEX, the following:
“It has no merits at all
that by means of a review of a final determination under NAFTA Chapter
XIX, the Complainant intends to have imports from the Russian Federation
imposed with countervailing duties, taking into consideration that such
country is not a party to the NAFTA, and therefore it would be illegal for
a panel to make a decision affecting the imports from such country”. Brief in Opposition to the
Complaint, Pages 21-38
3. In the same token, it is
undisputed that AGROMEX, in its capacity of Complainant, did never intend that
this Binational Panel actually extended its review to the imports of urea from
the Russian Federation. Specifically, in its Brief in response to the ones
submitted by other participants in opposition to the Complaint, AGROMEX stated
the following:
“...it is important to
clarify to this Panel, that... in the Brief of the Complainant itself,
there is a mention to the imports of urea from the United States of
America and the Russian Federation, [and that mention is] because that is
a reference of the review proceedings on dumping, that is to say, it is
only a mention to the name of the investigation, but in no way that
reference is made in the sense that this Complainant has the intention of
having this Panel review the Final Determination as for the imports of
urea from the Russian Federation too...”
Brief in Response, Page 12 (emphasis
added)
4. Accordingly, to the extent
that it is undisputed that AGROMEX -as acknowledged by AGROMEX itself-, does not
request this Binational Panel to make a review in connection with the imports of
urea from the Russian Federation, regardless of the exporting country, this
Binational Panel resolved to grant the motion filed by JSC to naturally exclude
the imports of urea from the Russian Federation from the current review.
B. ON THE SCOPE OF THE REVIEW BY THIS BINATIONAL
PANEL
1. Secondly, this Binational
Panel resolved certain motion related to the scope of the review that the Panel
may perform according to the attributions granted by the Article 1904 of the
NAFTA.
2. Specifically, the controversy
arose from certain request made by the Complainant AGROMEX, in the sense that
this Binational Panel should “declare the plain and total nullity of the Final
Determination” Brief in Support to the Complaint, Page 9. On this
subject, AGROMEX literally expressed the following:
“... legally speaking, the
final decision of this Panel should be made in order for the [Ministry of
Commerce] to revoke the determination at issue in
all its terms, so it may issue another one in accordance with law...”
Brief in Response, Page 45
3. In this regard, the Ministry of Commerce -and in the same
sense, UNOCAL-, made the following allegation:
“In the same taken it is
important to clarify that panels are not empowered to nullify or revoke a
final determination of the investigating authority. According to Article
1904.8 of the NAFTA, panels may only affirm or remand the final
determination in order for the investigating authority to adopt measures
not incompatibles with its decision...”. Brief in Opposition to the
Complaint, Page 30
4. In the opinion of this
Binational Panel, the apparent controversy may and must be resolved strictly in
accordance with the NAFTA express provision as stated in Article 1904.8,
according to which this Binational Panel may confirm the Final Determination o
remand it to the prior instance [the investigation authority] in order for it to
take any measure not incompatible with the Panel’s decision. Accordingly, the
attributions granted to this Binational Panel are strictly limited to confirm or
remand to the Ministry of Commerce the Final Determination at issue. In the
latter event, the Ministry of Commerce, as the Investigating Authority, must
take any measures not incompatible with this Panel’s Decision.
C. ON THE STANDARD OF REVIEW
1. A last issue prior to the
controversial ones with respect to the Final Determination, deals with the
standard of review that this Binational Panel must apply to review it.
2. The apparent dispute on this
issue arises from several statements made by the Complainant AGROMEX, in regard
to the alleged possibility that a Binational Panel has to apply, besides of the
standard of review set forth in Annex 1911 of the NAFTA -that is to say, Article
238 of the Federal Tax Code (Código Fiscal of the Federación) (“CFF”),
or any other law that may substitute it, based only on the record-, additional
or supplemental provisions to the CFF. Specifically, AGROMEX stated essentially
the following:
“...among the laws
infringed we may point out the Mexican Constitution, the 1994 [Antidumping
Code], the Foreign Trade Law and its Regulations, as well as several
provisions of supplemental application such as the Federal Tax Code and
the Federal Code on Civil Procedures...”
Brief in Support to the Complaint, Page 12
“...in the reviews before a
panel, several law provisions may apply, and this circumstance is based on
what is provided for in Article 1902.1 of the NAFTA, which indicates...
[“]The law provisions on antidumping and duties, as may apply for the
domestic laws of each Party, are the legislative precedents, the
regulations, the administrative practice and the judicial precedents or
authorities [”] ...it is legally acceptable for the panel to take into
consideration such law provisions as mentioned by the Complainant in its
brief... so that... the panel... may take into account each and all of
these provisions as mentioned by the Complainant in its brief, for all
applicable legal effects...” Brief in Response, Pages 14-17
3. The Ministry of Commerce -and
the participants in opposition to the Complaint- argued essentially that this
Binational Panel should only follow and apply the language of Article 1904.3 of
the NAFTA, which states that a Panel shall apply the standard of review set
forth in Annex 1911 [i.e., the standard provided for in Article 238 of
the CFF, or any other law that may substitute it, based only on the record] and
the general legal principles (principios generales de derecho) that a
court of the importing Party would otherwise apply to
review a determination issued by the competent investigating authority.
“The standard of review
that panels must apply is set forth in Article 1904.3 of the NAFTA, which
provides that: [“]The panel shall apply the standard of review set forth
in Appendix 1911 and the general legal principles...[”] Moreover, the
Appendix 1911 of the NAFTA provides that... [“] in the case of Mexico, the
standard of review provided for in Article 238 of the Federal Tax Code, or
any other law that may substitute it, based only on the record[”].”
Brief in Opposition to the Complaint,
Page 26
The discussion on the matter
even reached the would-be “intention” of the “negotiators” of the NAFTA,
of allegedly including purportedly additional or supplemental provisions to the
CFF or other laws. In this regard, the Ministry of Commerce sustained the
following:
“... the negotiators of
NAFTA did not have the intention of including, as part of the standard of
review, any other provision different to the one of the Federal Tax Code,
because if they had so intended, they would have indicated it expressly...
...the standard of review must not be confused with the scope of the
review or the faculties that a jurisdictional entity has, such as the
[former] Federal Tax Court or panels... ...the investigating authority
denies the supplementary application of the several law provisions
mentioned by the Complainant... ...we must not incur in the error of
considering that this panel, upon performing its review, is an arbitral
entity in charge of the constitutional control, because in Mexico only the
Federal Courts are empowered to do that...”
Brief in Opposition to the Complaint, Pages
26-37
The above was replied by AGROMEX
as follows:
“...In this regard, a panel
review may be based in several law provisions, and this circumstance is
supported by what is provided for in Article 1902.1 of the NAFTA... In the
same token, it is worth mentioning that the
Investigation Authority itself agrees that... Article 85 of the Foreign
Trade Law provides that in the absence of express provision of such law in
regard to administrative proceedings on the matter of unfair international
trade practices, Article 197 of the Federal Tax Code shall apply, and that
Article 197 of the Federal Tax Code provides that in the absence of
express provision the Federal Code of Civil Procedures shall apply.. ...it
has been demonstrated that the negotiators of NAFTA did have the intention
of including as part of the standard of review several law provisions as
stated in Article 1902.1 of the NAFTA...”
Brief in Response, Pages 10-12
4. This Binational Panel is in
agreement with what is expressed by the Ministry of Commerce and the
participants in opposition to the Complaint of AGROMEX. In opinion of this
Binational Panel, the language provided for in Article 1904.3 of the NAFTA with
respect to the standard of review that a Binational Panel must apply, does not
create any confusion whatsoever.
The language of such provision
does expressly refers to Article 238 of the CFF (or any law that may substitute
it), based only on the record, and to the general legal principles that a court
of the importing Party would otherwise apply to review a final determination
issued by the investigating authority.
5. Under the provision at issue,
the only remaining possible discussion on the standard of review would deal with
the determination of the manner of application and scope of the general legal
principles that “would otherwise be applied by a court of the importing Party to
review a final determination issued by the la investigating authority”.
6. In first place, the Mexican
court that “would otherwise review the Final Determination and apply the general
legal principles” -that is, in the event that the Final Determination were not
actually under review by this Binational Panel, but Complainant had decided to
challenge it by means of a contentious administrative proceeding- would be, in principle, the Federal
Court on Tax and Administrative Justice (Tribunal Federal de Justicia Fiscal
and Administrativa).
7. As for the manner in which the
Federal Court on Tax and Administrative Justice would apply the general legal
principles in reviewing a determination issued by the investigating authority,
it must be taken into consideration what is provided for in Article 14 of the
Mexican Constitution, whose provisions have traditionally been extended to
administrative matters. According to said article, “...the final judgment must
be issued in accordance with the literal provision stated in the law, and in the
lack of such, [the final judgment] shall be grounded on the general legal
principles.” That is to say, the Federal Court on Tax and Administrative Justice
should resolve, in first place, according to the literal provision, and only if
there is a lack of such express provision, it would be entitled to apply the
general legal principles.
8. Finally, it would be only
needed to determine the content and scope of the general legal principles that,
in the lack of an express provision, would be applied by a Mexican court. In
this regard, while it is true that their content may have a wide variety,
Article 1911 of the NAFTA provides an exemplificative list of the type of
principles that are included within the concept at issue. So, said article
mentions that general legal principles, at least for the purposes of Chapter XIX
of the NAFTA, include “principles such as legitimacy of legal standing, due
process, rules for interpretation of law, matters on non-validity of law and
exhaustiveness of administrative resources or appeals”.
9. Therefore, in opinion of this
Binational Panel, the controversy with respect to the applicable standard of
review -in the sense that this Binational Panel may review the Final
Determination based on criteria, provisions or laws different to the one set
forth in Article 1904.3-, is only apparent.
10. In opinion of this Binational
Panel, the alleged controversy derives, in any event, from an apparent confusion
in the allegations made by the Complainant, with respect to what must be
understood within the standard of review -to which Article 1904.3 of the NAFTA
makes reference-, in connection with the legal provisions and laws to which this
Binational Panel must refer to determine whether the Final Determination was
issued in accordance with the applicable “Mexican legal provisions in the matter
of antidumping and countervailing duties -which is a matter referred to
in Article 1904.2 of the NAFTA-.
The matter is so simple like
this: the manner in which a binational panel decides whether a determination was
issued in accordance or not with the Mexican laws (including all the laws of
Mexico), is by applying the criteria set forth in Article 238 of the CFF and the
general legal principles, as they would be applied by a Mexican court.
Accordingly, the list of laws
referred to in Article 1904.2 (including the Mexican including the Mexican
Constitution, international treaties, ordinary laws, etc.) is not, evidently,
the standard of review that a panel must apply, but rather precisely the legal
provisions that will be the basis to perform the review.1
11. Based on the above, according
to the provisions of the NAFTA, this Binational Panel is obliged to determine
whether the Final Determination was issued in accordance with the applicable
Mexican law provisions on antidumping and countervailing duties (as
provided for in Article 1904 of the NAFTA), by applying the standard of review
as set forth in Article 238 of the CFF, based only on the record, and in the lack of an express
provision, the general legal principles in the same manner that they would
otherwise be applied by a Mexican court.
Notes:
1 |
This is true by only reading Article 1904.2,
which expressly provides that the panel shall decide whether the final
determination at issue was in accordance with or not to said laws, “to the
same extent that a Mexican court could otherwise base on such
documents its review of a final determination of the investigating
authority.” (emphasis added) |
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